Coupons are commonplace in the consumer retail market, as consumers benefit from the savings offered, while manufacturers and retailers gain new customers using these coupons. Over eighty percent of the United States population uses coupons. For example, in 1999, manufacturers distributed $187 billion in coupons, and shoppers saved $3.6 billion from coupons.
Most coupons are paper coupons, typically distributed through the print media, such as newspapers, magazines, circulars, etc., direct contact, such as dispensers in stores and flyers, mail, and recently, by computer, as a coupon can be printed from the Internet. The costs associated with paper coupons, such as their creation, printing and the like, are expensive, and their success rate, total distribution compared to actual redemption, is low. In the case of circulars, flyers and mailings, that are typically distributed randomly, most of the coupons therein are thrown away and never used.
Computer distributed coupons lower costs to manufacturers, as they do not need to be printed or mailed. Also, they cut down on wasted paper, as they are only printed at the demand of a user. However, many people do not have access to computers. Even among those people with computers, some people have trouble using the Internet and find printing and other tasks associated with computer usage to be difficult.
Also, there is very little chance of impulse buying, important to retail sales. At best, impulse buying may be achieved with coupon dispensers and flyers, positioned at or near the product, that may yield an impulse sale. However, the purchaser may still deliberate the purchase on the way to the cashier and thus, not conclude the sale. Finally, regardless of the distribution format, paper coupons involve time to extract from the printed page or computer, and are cumbersome.
Many people carry mobile communication devices, such as cellular telephones, personal digital assistants (PDA's), “electronic wallets” and combinations thereof. The numbers of people with mobile communication devices is increasing rapidly. This trend is especially prevalent in Europe, particularly, Sweden and Finland, where greater than 60% of the population carry mobile communication devices. While the U.S. is presently behind this trend, mobile communication device, and in particular, cellular telephone use, is expected to catch up with Europe in the next few years.
Finally, many advertisers resort to broadcast media, particularly television and radio, to promote their products. As most of the public watches television, and it is the most popular medium for advertising, or listens to radio at some time during each day, many viewers or listeners have become upset with commercials. In many cases this has reached points where commercials are avoided and during this time, the broadcast media is switched to other programs, turned off, or the viewer or listener, if possible, goes away until the commercial is over. As a result, the effectiveness of commercials is lessened.